General Electric Company (GE) Problems Have Been A Long Time Coming

The many problems that General Electric Company (NYSE:GE) now faces were created many years ago.

One can trace the industrial superpower’s problems back decades, in fact. As CNN Money reports, a steady combination of rising complexity, bad deals, and questionable accounting have combined to crush GE’s shares this year:

These problems were self-inflicted. And they are startling because they happened not just at an icon of American business but under two legendary CEOs, Jack Welch and Jeff Immelt.

For GE’s 300,000 employees and millions of shareholders, the consequences have been painful. More than $100 billion in market value has vanished from GE since November 2016, more than the combined values of Ford (F), Delta (DAL) and UnitedContinental (UAL). GE, still a staple in investment portfolios, has plummeted 42% this year.

GE shares hit a six-year low last week after the company slashed its much-vaunted dividend by 50%. Some believe the payout will ultimately fall even further, as its cash flow issues worsen.

The company enjoyed many years of success — at least from a share price perspective — under legendary CEO Jack Welch. Welch went on a shopping spree starting in the early 80s and continued through the early 2000s that saw it buy a major bank and broadcasting giant NBC. In retrospect, those moves proved foolhardy, adding many layers of complexity and spiking pension obligations even more.

Now, GE is a train wreck, and there’s no easy way to fix it. The mistakes of the past have come back to haunt the former powerhouse, eroding both its own legacy and those of its once-respected former CEOs.

General Electric Company shares fell $0.06 (-0.33%) in premarket trading Tuesday. Year-to-date, GE has declined -41.75%, versus a 17.65% rise in the benchmark S&P 500 index during the same period.